03 | December | 2010 | Mostly Economics

Archive for December 3rd, 2010

Primer on RBI Functions and Working

December 3, 2010

RBI’s attempts to increase transparency and communications has got a verve under the current Governor Subbarao (see this research paper for a summary).

I just noticed these 2 documents on RBI’s website which help understand RBI and its functions:

As the name suggests first is a short version and the second one more detailed explanation. Scanning them gives nice insights about RBI. Especially the explanation of various departments in RBI.

Very well presented too with simple and easy to read langauge. Very useful material from RBI.

Posted in Central Banks / Monetary Policy, Indian Economy/Financial Markets | Leave a Comment »

Indian govt looking to cash in from the market surge

December 3, 2010

This blog is really surprised to see the huge response to government companies’ IPOs recently. What are seen as bureaucratic and slow companies and to see such a strong response from a market which always values speed and efficiency is a surprise. Another surprise is we see strong response to government companies in not shining sectors but sectors like coal and manganese. All these companies have mines in conflict areas and are burdened with labour issues.

They are stable companies for sure, but his great demand with issues getting oversubscribed many times I am not sure. Similar scenario was seen in previous crisis. But in financial markets, 2007 was nearly a century ago and unlikely to happen again. Anyways, if the whole market participants agree that all is well, I leave it on to markets.

Interestingly, Indian government is trying to cash on bigtime the recent surge in markets and market response to government companies. Finance Minister inaugrated a new website of Department of disinvestment. FM said:

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Posted in Academic research & research papers, Indian Economy/Financial Markets | Leave a Comment »

Economists increasingly gettting political

December 3, 2010

We are living in amazing times. Till now, we have had this concern of too many politicians being interested in economics and interfering as well. Now we have an opposite concern.

The concern is economists openly working with politicians and the views are getting intertwined. Though it is nothing new and economists have loved to advice politicians on the economic policy. But the advice should be independent of the view of the political party. There should be a strict Chinese wall (easier said than done) between economist’s views and politician’s views. The views can be similar but we should not have a situation of politicians influencing economists’ views. The moment this wall is compromised (which happens quite frequently), we have number of problems.

In US economists are open about which political party they side with and ideally it should not go further than that. There is this uncomfortable NYT article which shows how the two are working together to influence economic policy in US:

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